News

Global Market Report - 9 September

Australia

The Australian share market is set for a subdued open following weaker than expected US jobs growth and mounting expectations that the Federal Reserve will cut interest rates.

The SPI200 futures contract was down 7.0 points, or 0.11 per cent, at 6,631.0 at 7am Sydney time, suggesting a flat start for the benchmark S&P/ASX200 on Monday.

Australian shares have gained for a second day on the back of optimism that trade tensions could be easing, with tech stocks the standout performers as investors regain their appetite for risk.

The benchmark S&P/ASX200 index closed Friday up 34.1 points, or 0.52 per cent, to 6,647.3 points, while the broader All Ordinaries was up 31.9 points, or 0.47 per cent, to 6,752.7 points.

The S&P 500 and Dow Jones indices closed slightly higher on Friday following a mixed US jobs report, with investors betting on an interest rate cut this month.

US retail hiring declined for a seventh straight month, but was countered by strong wage gains which are expected to support consumer spending and keep the economy expanding moderately amid rising threats from trade tensions.

Meanwhile, China has again slashed the amount of cash banks must keep in reserve.

The Aussie dollar is buying 68.46 US cents up from 68.27 US cents on Friday.

The Australian Bureau of Statistics is scheduled to publish data on Monday showing how much was borrowed by households and businesses in July.

A lift of about 2.5 per cent is expected, in response to lower interest rates.

Asia

China stocks ended higher on Friday, posting their best weekly gains since late June, as Beijing vowed to further boost the economy, while Sino-US trade tensions cooled.

The blue-chip CSI300 index rose 0.6 per cent, to 3,948.51, while the Shanghai Composite Index closed up 0.5 per cent at 2,999.60.

Hong Kong stocks closed higher on Friday, posting their best week since June after the withdrawal of a controversial extradition bill and on hopes of a de-escalation in the protracted Sino-US trade dispute.

The Hang Seng index rose 0.7 per cent to 26,690.76, while the China Enterprises Index gained 0.5 per cent to 10,430.67.

Around the region, MSCI’s Asia ex-Japan stock index was firmer by 0.57 per cent, while Japan’s Nikkei index closed up 0.54 per cent.

Europe

European markets extended gains for a third day on Friday, as China’s move to boost bank lending outweighed data showing slower-than-expected US job growth and a fall in German industrial output.

In a strong week for European stocks after what investors saw as a positive turn of political events in Britain, Italy and Hong Kong as well as signals on resumption of US-China trade talks, the benchmark STOXX 600 index rose 1.7 per cent for the week, its third weekly gain in a row.

Shares in trade-sensitive chemical and industrial companies were the biggest percentage gainers on the STOXX index after China’s central bank said it was cutting the amount of cash that banks must hold as reserves, boosting liquidity to shore up the slowing economy.

Hopes of stimulus for major economies, hurt by a bruising trade war between the United States and China, have encouraged investors to take risk despite lingering worries about a recession.

Mixed jobs data from the world’s largest economy, which showed US hiring slowed more than expected in August although wage gains picked up, did little to change traders’ bets on two more rate cuts from the Federal Reserve this year.

Also feeding into the market are expectations that the European Central Bank will cut interest rates when it meets next week, and point to possible further moves to head off a broader downturn.

Fresh data on Friday showed an unexpected fall in German industrial output in July, adding to signs that manufacturers in Europe’s biggest economy are struggling.

Germany's DAX, however, was the outperformer on Friday with a 0.5 per cent rise, helped by Thyssenkrupp AG's shares which jumped 5 per cent to a two-month high after a report Finland's Kone was considering teaming up with a private equity partner to bid for the conglomerate's elevator business.

Auto shares, despite cutting some gains on news of US probe against four automakers, notched their biggest weekly gain since early April.

Shares of BMW and Volkswagen closed nearly flat after reports the US Justice Department was investigating a decision of the automakers to reach a voluntary agreement with California to adopt state emissions standards violated antitrust law.

Norway’s Telenor fell 3.4 per cent after it scrapped a plan to create a telecoms joint venture with Malaysia’s Axiata Group.

Europe’s energy index was at the bottom of the STOXX 600 as oil prices fell more than 1 per cent amid worries about US-China trade tensions.

North America

The S&P 500 and Dow industrials have closed slightly higher as investors digested a mixed US jobs report and bet on a Federal Reserve interest rate cut this month, while China's stimulus plan helped ease some concerns around global growth.

US job growth slowed more than expected in August, with retail hiring declining for a seventh straight month.

However this was countered by strong wage gains which are expected to support consumer spending and keep the economy expanding moderately amid rising threats from trade tensions.

Speaking at the University of Zurich on Friday, Fed Chair Jerome Powell said the labour market was strong and the central bank will continue to "act as appropriate" to sustain economic expansion.

He also said the US and the world economy are not likely to fall into recession.

Earlier, China's central bank said it would slash the amount of cash that banks must hold as reserves, releasing a total of 900 billion yuan ($US126.35 billion) in liquidity to shore up the flagging economy.

The Dow Jones Industrial Average rose 69.45 points on Friday, or 0.26 per cent, at 26,797.6, the S&P 500 gained 2.72 points, or 0.09 per cent, to 2978.72 and the Nasdaq Composite dropped 13.75 points, or 0.17 per cent, at 8103.07.

For the week, the S&P 500 rose 1.8 per cent, while the Dow added 1.5 per cent and the Nasdaq gained 1.8 per cent.

Of the S&P 500's 11 major sectors, eight ended the day with gains. Healthcare was the biggest boost with a 0.3 per cent increase, while the technology sector was the biggest drag with a 0.2 per cent drop.

The communication services sector was also under pressure as Facebook slipped 1.8 per cent after US state attorneys-general said they would investigate if the social media giant stifled competition and put users at risk.

The Labor Department's nonfarm payroll data showed the economy added 130,000 jobs in August, below expectations for a gain of 158,000, according to a Reuters survey of economists.

While average hourly earnings gained 0.4 per cent last month in the largest increase since February, the annual increase dipped to 3.2 per cent from 3.3 per cent in July.

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